Pharmacy Board Proposes Distributor Verification And Accreditation

In August 2005, we became aware of a new and potentially significant requirement affecting medical gases producers. The National Association Boards of Pharmacy proposed model legislation entitled Verified & Accredited Wholesale Distributors (VAWD). Focused on stopping the importation and sale of counterfeit drugs, this requirement could have a significant impact on our industry. This article will examine VAWD, and the GAWDA response.

Concerned about growing counterfeit drug shipments into the U.S. from places like Mexico, the National Association Boards of Pharmacy (NABP) developed model legislation requiring verification and accreditation of wholesale drug distributors. Resulting from an FDA request, this action has its backing and support. This model legislation is now in the hands of all 50 state legislatures, and one state, Indiana, has already adopted a version of it. Oklahoma appears to be moving forward with VAWD adoption, and three other states reportedly now have it under consideration.

VAWD requires each drug distributor facility to be registered. Once fully adopted by all states, firms that distribute to a multi-state area must individually register each site with each state where they distribute, unless the respective state legislatures adopt reciprocal agreements.

The second step after registration is for firms to go through the accreditation process. This includes criminal and financial background checks for all of the owners, development and implementation of specific business and compliance policies and procedures, and a third party accreditation audit.

Fees associated with VAWD are significant, such as a first year fee of $5,500, which includes a $2,500 registration fee and a $3,000 audit fee deposit. Background and financial checks are not included in the registration fee, and are the responsibility of the firm. The accreditation audit is $1,440 per day, with an average travel expense estimated at $875. Any additional audit fees are the responsibility of the firm. The accreditation audit is required every two years. We estimate the average cost to support a VAWD registration will be $4,000 – $5,000 per year. The good news is that sites registered with FDA as manufacturing sites are exempt from VAWD, but since most medical gases firms are both drug manufacturers and distributors, that exemption will likely not apply to many gases companies.

GAWDA, together with CGA, has mobilized to deal with this rapidly developing issue. We have communicated with both the state of Indiana and NABP to express our concerns and request a written exemption from this requirement. Both groups have advised it was not their intention to include medical gases in this requirement. However, there is no clearly delineated exemption for medical gases, and both the state of Indiana and NABP still are indicating that firms that distribute legend pharmaceuticals (Rx) are required to register. This means that any retail branch that distributes but does not fill medical gases may be required to comply with VAWD. GAWDA and CGA are working to clarify this issue and obtain a full exemption for medical gases from the VAWD requirement.

Working together with CGA, we are also working to identify where this issue stands in other states, so we can provide our input to those discussions during the legislative proposal stage. GAWDA and CGA have already invested considerable effort into this process, but it looks like there is still a lot more work left to do. GAWDA members can be assured we are doing, and will continue to do, our very best in favorably resolving this issue. This quick and coordinated response to a significant regulatory proposal affecting GAWDA members is another prime example of the value of your GAWDA membership.

If you would like more information or have any questions about VAWD, you can visit http://www.nabp.net/vawd/intro.asp, or contact me.

Gases and Welding Distributors Association
Meet the Author
GAWDA Medical Gases Consultant J. Robert Yeoman is president & CEO of B&R Compliance Associates LLC in Lehigh Valley, Pennsylvania. Members can reach him at (610) 868-7183 and at bob.yeoman@brcompliance.com.